Bankrupt Revel Casino Sells At Auction For $2 Billion Less Than It Cost To Build

A man reads a sign at the Revel Casino Hotel in Atlantic City notifying the public about its closure. Thomson Reuters

(Reuters) - Brookfield Asset Management BAMa.TO BAM.N won the auction for Atlantic City's bankrupt Revel Casino Hotel with a $110 million bid, said two sources familiar with the situation.

The company outbid Florida real estate developer Glenn Straub, who did not submit a superior bid by 5:00 a.m. ET, one source said.

Revel Casino, which cost $2.4 billion to build, opened in 2012 and closed on Sept. 2 after filing for its second bankruptcy in June. It was meant to be a Las Vegas-style resort, but its fine dining, striking design and entertainment did not catch on in a city that relies on bus tours and buffets.

Straub qualified as the backup bidder at $95.4 million, which would take the place of Brookfield if the Canadian company cannot close the sale.

Brookfield's spokesman, Revel's spokeswoman and Straub's attorney did not immediately respond to a request for comment.

Revel Casino had agreed to use Straub's initial $90 million cash bid to set the benchmark for other potential buyers. Straub had said he wanted to create a university at the site to attract the world's brightest minds to tackle social problems such as hunger.

Revel agreed to pay Straub a $3 million fee for acting as the initial bidder if he did not win the auction.

On Monday, Straub told Reuters he would challenge the results if he lost the auction because the process lacked transparency.

A hearing to approve the sale is scheduled for Tuesday, Oct. 7 in the U.S. Bankruptcy Court in Camden, New Jersey, where Judge Gloria Burns is overseeing the case.

Four Atlantic City casinos have closed this year as neighboring states have embraced gambling to pump up government revenue. The city had 12 casinos at the start of 2014.

Trump Entertainment Resorts Inc, which filed for bankruptcy last month, has said it could close its Taj Mahal casino in Atlantic City as soon as next month.

The case is In Re: Revel AC Inc., U.S. Bankruptcy Court, District of New Jersey, No. 14-22654.

(Reporting by Tanya Agrawal in Bangalore and Tom Hals in Delaware; Editing by Kirti Pandey)

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(Reporting by Tanya Agrawal in Bangalore and Tom Hals in Delaware; Editing by Kirti Pandey)